[quote=patb]… “When Glennon and Craig Melton sold their Sterling home eight months ago, they came to settlement with $140,000 in cash. After considering their situation for months, they decided they wanted out because they were afraid their mortgage interest rate was about to jump to an unaffordable level. They were paying only interest on their loan and not making a dent in the principal.
The couple bought the house for $570,000 in 2005, sold it for $440,000 in June and kicked in $10,000 for the closing costs…[/quote]
It would have been far cheaper for them to pay the fully amortized rate all along and hang on for a better day. Then they wouldn’t have had the big jump looming with a neg am history on year 6. They obviously purchased property above their means (5/1 ARM) and would not alter their lifestyle during the first five critical years (to pay down principal).
If their earning power is good (over $175K annually), then I think they did the right thing by saving their credit, because they will be able to buy again soon in a “down market.” If it took them many years to save for a downpayment and also will now, then they should have walked.
Not sure if VA is a judicial or non-judicial foreclosure state. patb, do you know?
